Japanese money manager AIJ Investment Advisors President Kazuhiko Asakawa said he ordered fund performance reports falsified in hopes the Japanese money manager could recoup losses that could top $1 billion.
Admitting for the first time that AIJ had disguised losses, Mr. Asakawa told a Japanese parliamentary committee Tuesday that he can’t explain how investor funds will be repaid. He apologized to clients and the securities investment community.
The losses have prompted the review of 265 money managers nationwide, and last week AIJ’s offices were raided and its registration revoked. Securities regulators say Mr. Asakawa and Shigeko Takahashi, another director, conspired to conceal trading losses to attract pension funds, a scandal that has weakened confidence in corporate governance after camera maker Olympus admitted last year to a 13-year cover-up of losses.
“I was the one who ordered to fabricate the reports and Ms. Takahashi was the one that created the reports,” Mr. Asakawa told the committee, making his first appearance following the firm’s suspension in February. “I wanted to recoup the losses I made. My duty now is to return the funds as much as possible to my clients.”
Lawmakers called for further questioning of Mr. Asakawa in front of the country’s Diet, saying his answers weren’t sufficient. Mr. Asakawa had initially declined a request to appear before the parliamentary committee.
The firm oversaw 145.8 billion yen ($1.8 billion) of clients’ money and lost 109.2 billion yen from derivatives trades directed by Mr. Asakawa over nine years, the Securities and Exchange Surveillance Commission said last week. AIJ’s clients included 92 pension funds, mostly small to midsized Japanese funds, according to the SESC.
The SESC said last week it might seek a criminal probe into AIJ. Convictions following any criminal proceedings would involve a maximum three years in prison or a fine of as much as 3 million yen, or both, the SESC said in a statement last week.
Mr. Asakawa, a former Nomura Holdings manager, steered AIJ’s derivatives trading, which centered on Nikkei 225 options and Japanese government bond futures, the SESC said last week. Wrong-way bets on bond interest rates fueled the losses, while some of the instruments were traded through an unidentified brokerage firm in Singapore, the SESC findings showed.